Distinct Business Entity

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DEFINITION of 'Distinct Business Entity'

A sub-division within a company that is completely autonomous from the rest of the company. The distinct business entity will have complete control over how it utilizes its assets, organizes its management and the most appropriate financing structure if required.

INVESTOPEDIA EXPLAINS 'Distinct Business Entity'

A distinct business entity will most likely be segregated from the rest of the company based on some operational distinction, such as having a separate product line, being geographically segregated or by offering a different service then the rest of the company.

Distinct business units can be a key element for any firm, as these units have the flexibility to make daily and high level management decisions at the operational level, which frequently yields better decision making. They can take the forms, such as a corporation, association or business trust.

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